Correlation Between Block and Alfi

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Can any of the company-specific risk be diversified away by investing in both Block and Alfi at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Block and Alfi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Block Inc and Alfi Inc, you can compare the effects of market volatilities on Block and Alfi and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Block with a short position of Alfi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Block and Alfi.

Diversification Opportunities for Block and Alfi

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between Block and Alfi is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and Alfi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfi Inc and Block is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Block Inc are associated (or correlated) with Alfi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfi Inc has no effect on the direction of Block i.e., Block and Alfi go up and down completely randomly.

Pair Corralation between Block and Alfi

Allowing for the 90-day total investment horizon Block Inc is expected to generate 0.37 times more return on investment than Alfi. However, Block Inc is 2.73 times less risky than Alfi. It trades about 0.13 of its potential returns per unit of risk. Alfi Inc is currently generating about -0.17 per unit of risk. If you would invest  6,011  in Block Inc on September 5, 2022 and sell it today you would earn a total of  807.00  from holding Block Inc or generate 13.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Block Inc  vs.  Alfi Inc

 Performance (%) 
       Timeline  
Block Inc 
Block Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Block Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Block may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Block Price Channel

Alfi Inc 
Alfi Performance
0 of 100
Over the last 90 days Alfi Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in January 2023. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Alfi Price Channel

Block and Alfi Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Block and Alfi

The main advantage of trading using opposite Block and Alfi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Block position performs unexpectedly, Alfi can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Alfi will offset losses from the drop in Alfi's long position.
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The idea behind Block Inc and Alfi Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Alfi vs. ACI Worldwide
Alfi vs. Adobe Systems Incorporated
Alfi vs. Allot Communications
Alfi vs. Altair Engineering
Check out your portfolio center. Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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